Originally Published MX September/October
2002
BUSINESS NEWS
Guidant Eludes Licensing Dispute through Cook Purchase
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Guidant
president and CEO Ron Dollens.
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Paying $3 billion for the license to use a single drug compound may seem a bit extravagant—but maybe not when leadership in the hotly contested emerging market for drug-eluting stents is at stake.
In July, Guidant Corp. (Indianapolis) announced that it would purchase Cook Group Inc. (Bloomington, IN) in a stock-for-stock transaction of up to 65.79 million Guidant shares worth a maximum of $3 billion. The transaction will give Guidant ownership of all of the Cook Group businesses, with specialties in interventional radiology, interventional cardiology, urology, neuroradiology, vascular medicine, and critical care.
More important, the purchase brings with it Cook's part of a coexclusive license to use paclitaxel as a coating for coronary stents. In preclinical and clinical studies at cytostatic doses, paclitaxel has demonstrated promising results for reducing the processes leading to restenosis.
So important is the paclitaxel license that Guidant made it the subject of a special set of clinical and legal conditions that must be fulfilled in order for the acquisition to move forward. According to the company, the conditions include "positive clinical results and Guidant's rights to use certain clinical data and to sell the Achieve product."
Guidant has been conducting U.S. trials of its Achieve paclitaxel-coated drug-eluting coronary stent system, which was earlier expected to reach international markets by midyear. The program suffered a setback in June, however, when the U.S. District Court for the Northern District of Illinois ruled that the development and distribution agreement between Guidant and Cook Inc. (Bloomington, IN), which was to have manufactured the stents, was not allowed by Cook's agreement with Angiotech Pharmaceuticals Inc. (Vancouver, BC, Canada), relating to the licensing of paclitaxel.
Calling Cook's agreements with Guidant a "sham," the court ruled that they violated an earlier coexclusive license agreement among Boston Scientific, Cook, and Angiotech. In 1997, Boston Scientific Corp. (Natick, MA) entered into an agreement with Angiotech and Cook under which Boston Scientific and Cook were granted coexclusive rights to use paclitaxel to coat coronary stents and other vascular and nonvascular products. In the fall of 2001, Cook and Guidant announced a series of agreements by which, among other things, Cook would enable Guidant to distribute its paclitaxel-coated stents.
"The court confirmed our belief that any arrangement between Cook and Guidant that results in Guidant developing or selling paclitaxel-coated stents violates the coexclusive license agreement," commented Jim Tobin, president and CEO of Boston Scientific.
Both Guidant and Cook initially promised to appeal the court's decision. "We will continue to pursue regulatory approvals and commercialization of the Achieve stent system in Europe this year, and in the United States next year, which may represent the first available paclitaxel-eluting stent system," said John M. Capek, PhD, president of Guidant Vascular Intervention.
At the end of June, the court issued a written opinion confirming its earlier ruling and noting that the Cook-Guidant agreements constituted "a de facto sublicense" that was "neither authorized, permitted, nor lawful." The court found that the Angiotech agreement "clearly evinces an intent that only Cook and Boston [Scientific] are to be players in the paclitaxel business," and wrote that Cook's actions "cannot be countenanced."
Guidant's purchase of Cook effectively outmaneuvered Boston Scientific, which had announced plans to seek a permanent injunction prohibiting any activities under the Cook-Guidant agreements and any future attempts to circumvent the Angiotech agreement. The company also wanted the court to enjoin the use of any clinical data and any technologies developed by Cook or Guidant in violation of the Angiotech agreement.
Commenting on the acquisition, Guidant president and CEO Ronald W. Dollens said, "This agreement is strategically important, as it adds clarity around our ability to fully participate in the drug-eluting stent market opportunity."
Guidant and Cook expect the acquisition to close in early 2003. Successful completion of the transaction will boost Guidant's efforts to match the pace of competitors Cordis Corp. (Miami), a Johnson & Johnson company; Boston Scientific; and Medtronic Inc. (Minneapolis) and Abbott Laboratories (Abbott Park, IL), who announced their partnership earlier this year (Business News, MX July/August 2002).
But just in case Guidant's latest gambit doesn't work, the company has already arranged for an alternative approach to the drug-eluting stent market. In March, the company announced that it had entered into a coexclusive license agreement with Novartis Pharmaceuticals AG (Basel, Switzerland) for rights to use the drug everolimus in drug-eluting stents for the treatment of coronary and peripheral vascular diseases. Pending regulatory approvals, Guidant expects to initiate clinical trials of everolimus-eluting coronary stents around the end of 2002.
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